Blumenfield Measure to Divest City Pension funds from Fossil Fuels
Taking a bold step to reduce the City’s investments in fossil fuels, Councilmember Blumenfield authored a measure directing the City to craft a comprehensive framework to divest city pensions from companies perpetuating and expanding the effects of climate change.
Los Angeles City Employees' Retirement System (LACERS) is responsible for managing City pensioners’ retirement dollars, which as of June 2020 totals to $17.7 billion. LACERS has invested more than $100 million in oil companies, many of which have shown no interest in moving towards renewable energy. Consistent with its commitment to combating climate change, the City has a responsibility to divest LACERS pension holdings from fossil fuel companies that are unwilling to turn away from the production of oil. Blumenfield put forward his motion because he felt it was time for the leadership of Los Angeles to divest from oil companies that are actively contributing to the global problem of climate change and subjecting Los Angeles to unnecessary risk, both environmentally and financially.
Climate change is not only a global environmental threat- it also presents a significant financial risk to shareholders of the companies contributing to environmental catastrophes. From financial losses because of extreme weather to asset re-pricing as the global economy moves towards a low-carbon economy, investments in fossil fuel companies can pose a climate-transition risk that may endanger the financial vitality of retirees’ investments.
Blumenfield Measure to Screen Insurers for Fossil Fuel Policies
In a similar effort, Councilmember Bob Blumenfield authored legislation directing the City evaluate prospective insurance companies based on their underwriting and investment in fossil fuels.
According to a recent report, the City of L.A. is paying nearly $4 million in annual insurance premiums, many of which are going to insurance companies that are fossil fuel underwriters and investors. With the passage of this motion, L.A. becomes the largest city to adopt such a policy, following Boulder County, Colorado; San Francisco, California; Cambridge and Sommerville, Massachusetts.
Climate change has had a significant impact on insurance for Californians: in recent years, insurers in California dropped coverage for hundreds of thousands living in wildfire risk areas until a moratorium was put into effect. At the same time, U.S. insurance companies continue to back the fossil fuels driving the climate crisis by providing the insurance they need to operate. The insurance industry is also a major institutional investor in fossil fuel companies; U.S. insurers alone have $90 billion invested in coal.
Blumenfield’s motion instructs the City Administrative Office (CAO) to inventory the insurance policies held by the city, and to develop a method for evaluating insurers based on their investment and underwriting in companies engaged in fossil fuel operations that “pose the greatest harm to the environment, including coal mining, tar sand drilling, and pipeline transport.” Blumenfield's motion also instructs the CAO to request the Airport, Water and Power, and Harbor departments to report in 90 days with options for how to use this evaluation method to choose companies from which to purchase or renew insurance.